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Archive for the ‘Banking’ Category

Contributed by Steve Schneider, President, CB Insurance

ImageEntrepreneurs invest their personal capital to start and build businesses. They write personal checks to make payroll, to fund equipment expenditures, and pay operating costs. They put their own money at risk in hopes of an acceptable return on their capital. Historically, investment risk taken by the successful entrepreneur has been rewarded by increased profits and a long-standing business venture. Those who opened businesses were lauded for their propensity and willingness to incur risk and for their commitment to community and growth.  

Not so much today. In this political season, entrepreneurs are painted as greedy or labeled as Wall Street “fat cats” In reality, most entrepreneurs across the USA are Main Streeters, like you and me. They sit across from friends and neighbors in local churches and restaurants. They get up each morning to work another day–to make a product or provide a service, train or manage staff, attempt to smartly grow a business, and to participate in and enrich a community. Each day across our country, entrepreneurs incur risk and employ others with no guaranty; only the hope of their own success.

On January 1, 2013, the financial success these entrepreneurs seek–the economic reward they pursue by putting personal capital at risk—will be severely diminished. Ordinary income tax rates for many small business owners in the highest tax bracket will increase by over 10%. A new 3.8% Medicare Tax (Obamacare) will be applied to certain investment income, such as dividends and interest income. Capital gains on investments will be taxed at a rate 30% higher than in 2012. Income derived from stock dividends will be taxed as ordinary income, rather than the current 15% tax rate – a whopping +400% increase for those in the highest tax bracket.  All this after the company itself has paid up to 35% of its income in corporate taxes. 

So what’s the big deal? Those doing well should “pay their fair share,” right? We can always debate whether tax rates of 40% income, 35% corporate, 23.8% capital gains, 40% dividend income, and 55% estate (death) are “fair.” The question today is: “Would you write a personal check to start a business, knowing that almost half of what you earn over time will go to the federal government in the form of taxes?”  Or stated another way, “Would you invest your own money to grow a business and employ more people and take more risk, knowing that upon the sale of your business the increased value derived from your investment and sweat equity will be substantially taxed, and, to add further insult, that upon your death more than half of the remaining value might also go to Washington, rather than to your heirs?” 

If you are curious why the unemployment rate remains stubbornly high, why GDP growth is anemic, and why many of our best and brightest college graduates remain unemployed, you need only put yourself in the position of an entrepreneur and ask – “Would I write that check?”

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Contributed by guest blogger Chuck Kocher, Certified Diamond Master Coach, ActionCoach

Remember those days when business folks sealed deals through a handshake, and it was all about who you knew?  Yes, those were the good old days, and I’d like to tell you that they’re still here!

Even in today’s technology-driven, global business environment—where we’re more prone to catch up with our buddies or business partners via Twitter and Facebook—a wise business strategy is to build a network of close relationships to generate sales referrals and ultimately revenue for your company. I would estimate that 70 percent of my business is developed through my key strategic partners: people with whom I have developed strong personal and professional ties, who then provide warm referrals to people they know.

Another way to put this is to create a strategy around creating mutually beneficial relationships to drive your business—and theirs. Here are a few key tips to get you started:

–  Tip 1: Make this a priority in your business life. Schedule 4 to 5 strategic partner meetings every week to build upon relationships and develop revenue channels.

–  Tip  2: Take your time and be a giver. Don’t go into the first meeting making it all about you and what you need. Learn more about your potential partner, what their business needs are, and ways in which you can assist.

–  Tip 3: Set the table. In meeting number 2 or 3, let your partner know that a mutually productive business partnership is a goal of yours.

–  Tip 4: Give again. Once a partnership has been established, give referrals to him or her as often as possible.

–  Tip 5: Build upon your network. Now that the groundwork for exchange has been completed, ask for the names of your partner’s trusted advisors and then go about making those people or firms a part of your network.

–  Tip 6: Perform well. Once your strategic partner has referred you to one of their advisors, perform well so that your strategic partner has confidence to provide you with more opportunities.

In short, it’s important to think foremost about the people around you and the networks you want to develop to generate revenue and opportunities for your business. Yes, social media and advertising are important tools for business generation—but so is building strategic partners.

For more information on action coach Chuck Kocher, CLICK HERE.

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Contributed by Gary Markle, President, Central Bank & Trust

The U.S. Small Business Administration recently revamped their CAPLines program after engaging financial industry leaders in all 50 states to implement changes benefiting SBA lending partners—such as Central Bank & Trust—and small business owners.

According to the SBA revised guidelines, the new CapLines program gives small businesses more flexibility to finance the contracts, subcontracts, and purchase orders they compete for and win. “By addressing the short-term and cyclical working capital needs of small businesses, the revolving line of credit will help them manage their cash cycle, scale up, and create jobs,” the SBA explains.

From our perspective as an SBA lender, these revisions make this once-underutilized lending program more attractive and allow us to fund a borrower’s short-term working capital needs under the SBA guidelines. For businesses that are growing and have been awarded new contracts, banks now have the capacity to do revolving lines of credit up to $5 million utilizing their own credit parameters. This means business owners can work directly with a dedicated SBA lender and process their line of credit expeditiously.

Key benefits of the CAPLines program (which can be found at SBA.gov):

– Small businesses can pledge accounts receivable, inventory, contracts, and purchase orders to secure an SBA revolving line of credit.

–  The SBA will no longer require small business owners without buildings or equipment to use their personal assets as collateral to secure working capital.

–  Small business subcontractors can now obtain an SBA-guaranteed line of credit to finance their work on a contract with a federal prime contractor.

To understand the benefits and details of the CAPLines program, small business owners should work with a lender who knows the SBA policies, procedures, and systems to deliver and service this type of revolving credit. The small business owner should also know who they’re talking to, who’s processing the loan, and who’s making the decisions that potentially affect their future growth.

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Contributed by Tim Coutts, COO, Central Bancorp

Gone are the days where a business valuation was only done when contemplating a sale.  The process of determining the value of your business is a good practice in a market where efficiency is key.  Understanding the weaknesses and potential opportunities for your business is of tremendous value, so why wait until you want to sell your business to gain this insight?

Formal business valuation is an excellent tool for businesses that can afford the time and expense that is required.  However, resources for quick, easy and cost effective estimates are also available. We are currently offering our clients access to an Online Business Valuation tool provided by ValuSource, a locally-based national company with over 25 years of experience.

Here are a few examples of how even a high-level business valuation can make your business more efficient and more profitable, long before you ever think of selling it.

  1. Find opportunities for improvement in your operations by comparing key financial benchmarks (e.g., sales, distributed earnings) with companies in your industry that have been sold.  One of the key tools for strategic planning is benchmarking – measuring the performance of one company against another high-performing company.  The challenge for businesses, especially for small businesses, is finding the data to use as a benchmark.  When you obtain an estimate of value from Online Business Valuation, one of the resources involved is a database of over 30,000 businesses that have been sold, including numerous details about their operations.  By comparing such performance metrics as sales, revenue, and discretionary earnings to those of companies in your industry, you can see how those metrics impact the price for which that company sold.  How do the sales, discretionary earnings or other metrics of your company compare to other companies that sold in the price range you want to reach for your company?
  2. Find an opportunity for growth through leveraging debt (more…)

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Contributed by Jill Johnson, Director of Marketing

Central Bank & Trust ranked as the number two lender for SBA Loans in El Paso County in 2010. The local branch, which is a part of Farmers & Stockmens Bank, originated $4,740,000 in SBA 7(a) Loans in Fiscal Year 2010, our first year of operations. (Note – the SBA Fiscal Year begins on 10/1, so the total volume of SBA loans for Central Bank & Trust in all of 2010 was nearly $10 million, a number that certainly made a positive impact on our community.)

The Colorado Springs Business Journal originally reported the volume for Central Bank & Trust incorrectly in their June 2011 list of top SBA lenders for the county, but the revised list (click here to view) reflects the proper numbers and rankings.

Providing capital to local businesses, especially during this critical recovery, will continue to be a top priority.

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Contributed by Scott Yeoman, CEO, Central Bank & Trust

At the end of March the U.S. Government announced with some degree of fanfare that the Troubled Asset Relief Program (“TARP”) was positioned to earn the U.S. Treasury, and hence U.S. Taxpayers, a profit of $24 Billion.  The TARP program was much politicized, frequently criticized and very much misunderstood by most people – in large part because it was a complicated program perceived by most as a bailout for fat cat bankers (thanks, President Obama).

At its core, TARP amounted to an emergency loan for those banks that participated in the program.  Being in the business of making and collecting loans, most banks diligently honor their commitments and repay their obligations – just like most individual and business borrowers do – so it is no surprise that the banking industry has repaid their TARP funds ahead of the required payment schedule.  All in all, TARP kept the dominoes from falling off the table and helped restore some stability when it was most needed.  An investment in the banking system was a sound investment for the government in the crisis of 2008 and is a solid investment for private investors in normal times.  But I fear the definition of “normal” may take longer to define.

While the government recovered a profit on TARP, its political reaction to the banking crisis, a.k.a. the Dodd-Frank legislation, is where the lasting costs of the crisis will surface.  Dodd-Frank is a massive, comprehensive reform bill that aspires to cure all the perceived troubles of the financial services industry.  Some of the more obvious consequences of the bill already evident in the market include (more…)

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Contributed by Ron Johnson, CEO Central Bancorp

Life is about choices.

Every day we face choices – big and small.  Inevitably we convince ourselves that the big decisions, the big choices are the ones that define our lives.  However, I contend that it is the great multitude of small choices that shape our paths; those countless little decisions form the foundation from which we make life’s most impactful decisions. 

Certainly the history of Central Bancorp is a collection of many decisions.  When my partner and I established The Corundum Group in 1992, we saw how the needs of high-net-worth families were misunderstood and under served by conventional financial firms.  We pointedly chose to establish a business driven by client needs rather than profit margins.  Today, The Corundum Group serves a wide variety of families and manages over $1 billion in assets, and we continue to choose each day to focus on client service over the bottom line.  Sticking to our direction takes focus and discipline but has served us, and our clients, very well. (more…)

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